This month, the Senate Health Education and Labor (HELP) committee began to craft a bipartisan bill to bring short-term stability to the Affordable Care Act’s (ACA) individual insurance market. The committee, led by Chairman Lamar Alexander (R-TN) and ranking member Patty Murray (D-WA), hosted a series of four hearings featuring insurance commissioners, consumer advocates, a state-based marketplace leader, insurers, providers, and a panel of governors including John Hickenlooper (D-CO), who with Ohio Republican John Kasich last week released their bipartisan proposal for market stabilization.
While acknowledging ongoing divisions over the root causes of market instability, committee leaders from both sides of the aisle clearly acknowledged their common goal was to find immediate solutions to stabilize insurance markets and provide consumers with more low-cost choices. During the hearings, several clear themes emerged that provide insight into what may be included in the proposed stabilization bill.
Cost-Sharing Reductions: All witnesses agreed on the need for the federal government to pay cost-sharing reduction payments, at least in the short term. Most indicated support for funding the payments for at least two more years, while others indicated that the subsidy payments should be funded permanently, or at least until other reforms are in place.
1332 State Innovation Waivers: Section 1332 waivers allow states to waive certain portions of the ACA as long as the scope, comprehensiveness, and affordability of coverage is comparable to what is currently mandated (known as the 1332 guardrails), and the waivers do not increase the federal deficit. There was extensive discussion during the hearings about how 1332 waivers could be modified in order to grant states additional flexibility. Potential ideas focused around two themes: administrative changes to the application process and changes to the waiver guardrails. Several ideas proposed to streamline the 1332 waiver process and encourage state innovation include:
- Loosening the state legislative requirement so states could apply without having to convene their legislatures;
- Adjusting the budget neutrality requirements so that states could measure budget neutrality over the course of the waiver, versus in each year of the waiver.
- Expediting applications through a fast-track option for “copy-cat” waivers and waivers developed because of emergency situations, limiting the six-month approval process for waivers, and developing standard applications that states can use for the waivers.
- Eliminating firewalls between 1332 and 1115 waivers that prevent states from facilitating joint 1332 and 1115 (Medicaid) waivers.
Throughout the hearings, there was no consensus about how far flexibility over the 1332 guardrails should be pushed. While some witnesses stressed the waiver guardrails were common-sense protections for consumers, others said that the guardrails restricted insurance plan design innovation. Chairman Alexander affirmed his commitment to maintaining basic consumer protections, such eliminating lifetime and annual limits and maintaining guaranteed issue requirements. The disputed recommendations included allowing states to waive mandated benefits or alter age rating bands. Some expressed interest in changing the “comprehensiveness” standard of the guardrails, suggesting that insurance products should be required to meet an actuarial equivalent standard rather than the “as comprehensive as” standard established under current regulations.
“Copper” or Catastrophic Insurance Plans: Favored by Chairman Alexander, witnesses expressed mixed views about the concept of extending the availability of “copper” plans, specifically lifting the age limit that restricts individuals over the age of 29 from receiving tax credits for these plans. Some witnesses, including Utah Republican Governor Gary Herbert, supported extension of copper plans as a way to create more affordable choices for consumers. Other witnesses expressed caution about the implications of making copper plans more available, fearing they would cause:
- An increase in out-of-pocket spending for consumers who utilize services, and
- A rise in copper plan premiums that could result from adding older adults to those plans.
Some suggested that copper plans should be paired with health savings accounts to mitigate concerns about increased out-of-pocket spending.
Reinsurance: Most witnesses supported financing a federal reinsurance program, some suggested a program similar to what existed under the ACA. Witnesses noted the importance of reinsurance as a means to protect insurers from taking on higher-than-expected risk, especially while markets are stabilizing. They stated reinsurance would encourage greater participation and lower premiums. Alexander expressed repeated concerns about financing such a program while the federal government faced a $23 trillion deficit. Citing examples from Alaska, Maine, and Minnesota, he indicated a desire for states to take responsibility for financing a reinsurance program. Several witnesses countered that it would not be feasible for states to build and finance a program within the next one to two years, in part because of the limited state legislative sessions during which to pass such a program.
Beyond these topics, several themes emerged over the course of the committee’s hearings including concerns over the Administration’s recent announcement to reduce the federal marketing and outreach budget for the federal marketplace, the debate over continuous coverage requirements (e.g., the individual mandate), greater flexibility over the definition of insurance, requests to repeal the health insurance tax, and the need for greater focus over the long-term to address rising health care costs.
What Comes Next?
Alexander and Murray have stated their goal is to have a short-term stabilization bill ready by this week, though whether that bill will be able to pass through both houses is unknown. They will need to bridge the gap on several divisive issues, in particular how to reconcile concerns about consumer protections with desires for increased flexibility. NASHP will continue to monitor Congressional action as it unfolds.